The Ultrabook Opportunity for the Channel

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Ultrabooks are clearly the star of CES this year, and with channel-friendly companies behind them -- Intel, HP, Dell and Lenovo -- could these powerful and portable PCs be the answer to declining hardware margins and the rise of Apple?

The CES frenzy has set off a lot of interest in the ultrabook,
a mobile computer that could spell big opportunity for the channel. With the
portability and the performance to compete against MacBook Air, the ultrabook form
factor offers businesses an alternative to Apple while still maintaining the manageability
of a PC platform.

"I really think that the ultrabook effort, if it works the
way Intel and its partners intend, I think it could create some interesting and
really positive developments for the channel," said Charles King,
president and principal analyst for Pund-IT, an IT analyst firm.

The rise of the ultrabook can be traced to Intel's
announcement last August that it had set aside a $300 million fund to develop
and market processors and invest in partner manufacturers willing to develop
devices that fit a certain spec sheet developed by the Intel engineers. To
officially be bestowed the 'ultrabook' title during this first phase of
deployment, manufacturers must make their devices less than 20 mm thick, less
than 3.1 pounds, price them around $1,000, use one of five Intel Core i5 or i7
processors and Intel's HD 3000 graphics subsystem, and ensure at least 5 hours
of battery life.

"I think the channel can tell customers, 'You've got
something here,'" said Laura Didio, principal of ITIC, an IT analyst firm.
"You've got all the features, functions and the form factors you want and
you're going to have to have great tech support at an affordable price."

However, partners must take care to differentiate these
powerful PCs from netbooks, some coming in at the sub $500 level. Ultrabooks
can be three times that price. Just this week, HP announced the one of the more
anticipated ultrabooks expected from the CES crop, the new HP Envy 14 Spectre.
Tagged at just under $1400 this slick little number is far from a bargain bin
device, but it isn't meant to be.

That's where vendors and partners will need to work together
to ensure success. Unlike the netbooks, these ultrabooks are not necessarily
cheap throwaways. They're business devices meant to be aggressively priced for
the performance and lightweight to be comparable with the MacBook Air.

"You always do pay a lot more for ultra mobility, but
the real question is not so much the comparison of say the price of a Dell or Lenovo
ultrabook compared to its other laptops. It's really a matter of comparing
against the price of what Apple is charging for the MacBook Air," King said.
"I would expect to see some very aggressive pricing coming out at CES that
could really give Apple a run for its money." The MacBook Air starts at
$999.

According to Didio, another consideration is to not forget about
AMD. Sure, Intel is driving the ultrabook trend -- it was the one that invented
the specs in the first place. But AMD is making processors and chipsets that
can keep up and even if they may not be officially 'ultrabooks,' they still
bring the sexy.

"Customers need not fear that AMD is way behind what
you're getting in functionality in an Intel processor," Didio said.
"They're making all the same efforts and hitting all the same features and
performance function that Intel is. What AMD is doing is undercutting Intel on
price."

In any event, channel partners should take heart,
considering how the Apple resurgence in the business world has stepped all over
the traditional channel's turf.

"The channel is looking at a vendor that is pursuing
both its own retail efforts with the Apple stores and also expanding efforts
with mainline retailers," King said. "If you're a channel player,
you've got to look at that and say how can I compete against that?"

In addition to giving partners a viable business proposition
for selling something mobile and sexy, a PC offering also provides a huge
advantage to customers looking to solve the manageability problem that the
influx of iPads and MacBooks has dredged up.

"Apple has been a very big player in those consumerization
of IT developments. The company has a real cache among consumers, but it's also
leads to some interesting challenges for IT shops as far as managing and
securing those devices goes," King said. "I think the ultrabook could
be a really interesting opportunity in the channel in that it gives channel partners
products that are basically analogous in form and performance to very popular
consumer products, but, since they're mostly Windows machines, they can be
managed mostly seamlessly with existing business IT infrastructure."